Osborne wants public to wield axe

CHANCELLOR George Osborne has called on the public to help identify which services should be cut to ease Britain's debt crisis and praised Canada's notorious "bloodbath budget" as an example of how a multi-billion pound deficit can be overturned.

Mr Osborne said slashing billions off spending was "the great national challenge of our generation" as he outlined the Coalition's approach to its Comprehensive Spending Review.

A series of consultations would be held so the "brightest and best" from society, business and charities can provide ideas on reducing costs.

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Ministers will also be forced to justify every item of departmental expenditure before a "Star Chamber" of senior colleagues in plans due to be presented by the end of next month.

The announcement came as the economy suffered a double blow, with nationalised lender Northern Rock revealing it was planning to cut up to 650 jobs by the end of the year, and credit ratings agency Fitch warning Britain could lose its AAA credit rating unless deeper and faster cuts are made. The plans were also condemned by opponents as a political "axe factor" and lacking substance.

But Mr Osborne insisted: "We are genuinely seeking to engage as many people as possible, the brightest civil servants across all the Government departments, the best people from the devolved administrations, the best people from pressure groups, independent think-tanks and the front-line public services."

The Chancellor told MPs the UK needed to learn from Canada's experience in tackling its deficit in the 1990s.

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The country turned a 9 per cent deficit of 25bn – with a public debt of 341bn – into a surplus over three years by implementing huge cuts in healthcare and education budgets and through the loss of thousands of public sector jobs.

By 2007, Canada had the lowest level of public debt of the G8 countries and members of the coalition government have held detailed talks with Canadian officials.

Jocelyne Bourgon, an official who oversaw the reduction of the public service by 47,000 jobs, emphasised the severity of the Canadian cuts, saying 'nothing was off the table' and in many parts of the country, between 11 and 12 per cent of the civil service workforce was cut at a stroke.

Britain's public finances appear to be in an even more desperate state, with an 11 per cent deficit versus Canada's nine per cent.

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Mr Osborne said: "Canada asked probing questions about every part of government spending. They engaged the public in the choices that had to be made and they took the whole country with them.

"That is what we will seek to do. We are committed to carrying out Britain's unavoidable deficit reduction plan in a way that strengthens and unites this country. This is the great national challenge of our generation."

The new Office for Budgetary Responsibility will produce its first independent assessment of "the growth forecast and other forecasts" next Monday – ahead of the first Budget on June 22.

The plans were attacked by Shadow Chancellor Alistair Darling who said "there did not seem to be very much substance" while SDLP MP Mark Durkan accused the coalition of taking an "axe factor approach to government".

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Northern Rock currently has 4,500 staff and the Unite union said the cuts were "devastating".

The firm has launched a consultation about the losses, which are aimed at reducing costs ahead of an eventual return to the private sector.

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